Financial record keeping is the cornerstone of running an efficient business and is often the marker between successful and failed business attempts.
Solid financial record keeping allows entrepreneurs to gauge the financial health of their businesses, establish and monitor trends, detect and resolve snags and plan for future financial commitments. It also instills confidence in lenders and other stakeholders.
“It illustrates to people that you have good, strong disciplines within your business and how you go about running it. As a bank, if we were going in asking for access to financial information and it wasn’t available or didn’t exist, it would raise questions about the discipline you have in running your business.
“Our sense is that it is one of those things that will make your business or break your business, so you really should have a finger on the pulse as it relates to your finances constantly,” said Alan Shannon, head of relationship banking sales at Nedbank.
According to Nedbank, businesses must keep the following records in order to comply with the law:
- Bank Statements
- Sales invoices and credit notes
- Supplier documentation such as delivery notes
- A correspondence file for letters received and sent
- VAT documents, if registered for VAT
- Receipts for any cash purchases
By law, formal business entities such as private and personal liability companies as well as close corporations are also required to produce annual financial statements.
In general, financial statements are made up of a statement of financial position, a statement of comprehensive income and a statement in changes of equity – commonly referred to as a balance sheet, an income statement and a statement of changes in retained earnings respectively. Generic financial statements also include a cashflow statement, notes to the financial statements and a director or owner’s report.
Nedbank’s Essential Guide for Small-Business Owners outlines the three different levels of financial statements, all of which are gearing to meet different needs.
Shannon said Nedbank’s small business clients could take advantage of its free Money Manager™ tool, which feeds directly from internet banking to help entrepreneurs generate cost and cashflow analyses and income statements. A fee-based platform, Nedbank Accounting Sage One is available to enhance record keeping.
Whether you are starting a business, running an established business or looking to expand, you need a reliable, affordable banking partner who understands the challenges of your business and responds with flexible solutions to your needs. Nedbank has extensive experience in serving small businesses and offers a comprehensive suite of payment, investment and finance solutions, as well as industry specialisation and services that extend beyond banking. Why not contact one of Nedbank’s small business experts to help you see money differently and take your business to the next level? Call 0860-116-400, e-mail SmallBusinessServices@nedbank.co.za or visit www.nedbank.co.za/business for more information.